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Article
Publication date: 1 August 2016

Adel Elgharbawy and Magdy Abdel-Kader

This paper aims to investigate the possible trade-off between accountability and enterprise in the context of comply or explain governance. The issue was addressed through…

4638

Abstract

Purpose

This paper aims to investigate the possible trade-off between accountability and enterprise in the context of comply or explain governance. The issue was addressed through examining the effect of compliance with the corporate governance code (CGC) on corporate entrepreneurship (CE) and organisational performance.

Design/methodology/approach

Based on cross-sectional survey and content analysis of annual reports, the level of CE and compliance with the CGC were measured in the large and medium-listed companies in the UK during 2010. Partial least squares structural equation modelling (PLS-SEM) was used for data analysis.

Findings

The results suggest no conflict between compliance with the CGC and CE in the UK, which can be attributed to the flexibility of the “comply or explain” approach. This implies that no trade-off between accountability and enterprise in the context of comply or explain governance.

Practical implications

The study provides evidence in support of the regulatory governance framework in the UK and the comply or explain approach at large. This evidence contributes to the debate on the rules-based or principles-based governance, which may affect future CG regulations. It can also guide the directors to achieve the balance between their conformance and performance roles.

Originality/value

The study bridges the gap between CG and CE disciplines through developing a theoretical model that integrate contingency and agency theories lenses. Adopting a holistic approach provides insights into the relationships between CG and CE, rather than investigating the effect of each of these practices separately on organisational performance.

Details

Corporate Governance, vol. 16 no. 4
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 9 January 2025

Adel Elgharbawy and Laila Mohamed Alshawadfy Aladwey

This paper aims to investigate the effect of ESG performance and board diversity on tax avoidance practices of FTSE350 companies before and after the COVID-19 pandemic from the…

122

Abstract

Purpose

This paper aims to investigate the effect of ESG performance and board diversity on tax avoidance practices of FTSE350 companies before and after the COVID-19 pandemic from the stakeholder theory perspective.

Design/methodology/approach

Using random-effect regression analysis on data from 2017 to 2023, the study analyzes ESG scores and various tax avoidance measures pre- and post-COVID-19. A two-stage least squares regression analysis using instrumental variables is used to address endogeneity.

Findings

Results show that gender, age and network diversity reduce tax avoidance, while skill diversity has no effect, and nationality diversity increases it. High ESG scores lower tax avoidance, but higher governance scores increase it. Findings hold across different tax avoidance measures, sectors and pre/post-COVID-19 periods.

Research limitations/implications

Future research should explore the roles of board committees and external governance mechanisms and investigate tax avoidance in small- and medium-sized enterprises.

Practical implications

The findings highlight the need for policymakers to enforce board diversity and promote ESG practices to encourage ethical tax behavior. Companies can reduce tax avoidance and enhance moral standards by prioritizing stakeholder interests.

Social implications

Promoting board diversity enhances social equity, supports ESG practices, aligns corporate actions with societal values and fosters a sustainable business environment.

Originality/value

The paper expands existing research by analyzing the combined effects of board diversity and ESG performance on tax avoidance. It offers recent UK evidence on tax avoidance determinants, emphasizing behavioral changes pre- and post-COVID-19.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 4 October 2022

Mostafa Kamal Hassan, Fathia Elleuch Lahyani and Adel Elgharbawy

The purpose of this study is to investigate the effect of politically connected directors (PCDs), media coverage and their interaction on firm performance in an emerging market…

366

Abstract

Purpose

The purpose of this study is to investigate the effect of politically connected directors (PCDs), media coverage and their interaction on firm performance in an emerging market economy (UAE).

Design/methodology/approach

This study relies on the agency theory and the resource dependency theory and uses a panel data set of a sample of non-financial firms listed in the UAE stock market from 2009 to 2016. Data were analyzed using fixed-effects regression. Instrumental variable regression was used to address potential endogeneity.

Findings

PCDs and media are positively associated with firm performance (ROE and Tobin’s q). Media moderates the PCDs–performance relationship, as the interaction between PCDs and media coverage is negatively associated with firm performance. Under growing media attention, reputational concerns prevent PCDs from using their connections to gain particular advantages to their firms to avoid damaging their image.

Practical implications

Regulators need to acknowledge and define the roles of PCDs and media in business governance.

Originality/value

To the best of authors’ knowledge, this study is the first empirical examination testing the effect of the interplay between PCDs and media on firm performance in an emerging market economy such as UAE.

Details

Meditari Accountancy Research, vol. 31 no. 6
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 28 October 2021

Laila Aladwey, Adel Elgharbawy and Mona Atef Ganna

This study aims to investigate the relationship between the attributes of corporate boards in UK companies and their tendency to assure their corporate social responsibility (CSR…

2641

Abstract

Purpose

This study aims to investigate the relationship between the attributes of corporate boards in UK companies and their tendency to assure their corporate social responsibility (CSR) reports.

Design/methodology/approach

From the agency theory perspective, the authors examine the impact of board attributes on the assurance of CSR reports for the Financial Times Stock Exchange (FTSE) 350 during 2016–2019. The authors used annual integrated reports, companies’ websites and Thomson Reuters Eikon database for data collection and the logistic regression for data analysis.

Findings

The results confirm that some board attributes significantly influence a company’s decision to assure its CSR reports. While board size, board tenure, the presence of female board members and female executive directors and Chief Executive Officers (CEOs)’ global working experience positively contribute to CSR assurance (CSRA) decisions, the chairman’s independence negatively contributes to it. However, board independence, board meetings and board financial expertise demonstrate no effect on the CSRA decision.

Research limitations/implications

The authors focus on some attributes of board members, but the authors did not consider board diversity in its broader meaning. Moreover, the effect of board committees and their attributes on CSRA was not addressed. The authors also did not consider the impact of scope, the quality level of assurance service and the differences between assurance providers on companies’ decisions to neither undertake CSRA nor choose between assurance providers.

Practical implications

The study provides insights into the increasing demand on voluntary assurance to boost the credibility of CSR reports and the role of the board of directors (BOD) in taking this initiative. The findings highlight the importance of board diversity (e.g. gender) in improving transparency and sustainability reporting, which can help policymakers and regulators in shaping future governance policies. Additionally, the findings refer to a drawback in the UK Corporate Governance Code regarding the chairman’s independence, which requires corrective actions from the Financial Reporting Council. The findings raise concern over the small share of audit firms in the assurance service market, despite the growing demand for these services in the UK, which may require more attention to these services from the audit firms.

Social implications

Companies are increasingly pressurized, especially after the COVID-19 pandemic, to discharge their accountability to stakeholders and to act in a socially responsible manner in their business activities. CSR reporting is one of the main tools that companies use to communicate their social activities. Understanding the determinants of voluntary CSRA helps to increase the credibility of CSR reports and the favorable response to social pressure.

Originality/value

The authors add empirical evidence to the limited literature on CSRA about the role of the BOD in undertaking companies’ social responsibility, improving CSR reporting and reducing information asymmetry. It also highlights the significance of maintaining a balanced BOD in terms of gender, experience and tenure, in minimizing the risk of perpetuating non-transparent integrated reporting.

Details

Corporate Governance: The International Journal of Business in Society, vol. 22 no. 4
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 29 January 2020

Adel Elgharbawy

This study aims to compare types and levels of risk and risk management practices (RMPs) including the recognition, identification, assessment, analysis, monitoring and control of…

1048

Abstract

Purpose

This study aims to compare types and levels of risk and risk management practices (RMPs) including the recognition, identification, assessment, analysis, monitoring and control of risk in both Islamic and conventional banks.

Design/methodology/approach

A questionnaire survey was conducted among the Islamic and conventional banks in Qatar, together with an analysis of archival data extracted from the Thomson Reuters Eikon database for the period 2009-2018. Data were analysed using descriptive statistics, ANOVA and regression analysis.

Findings

Islamic banks encounter unique types and levels of risk that are not encountered by conventional banks. In Islamic banks, risks such as those of operation and Sharia non-compliance are perceived to be higher, while in conventional banks other risks such as those of credit and insolvency are higher; other risks, for example, liquidity risk, are faced by both. RMPs are determined by understanding risk and risk management, risk identification, risk monitoring and control and credit risk analysis, but not by risk assessment and analysis. However, the RMPs of the two types of bank are not significantly different, except in the analysis of credit risk.

Research limitations/implications

The study contributes to the debate in the literature by developing a better understanding of the dynamism of risk management in Qatari banks, which can be extended to similar contexts in the region. However, the relatively small sample size in only one country limits the possibility of generalizing the findings. The survey methodology is based on the perception of bankers rather than their actual actions and does not provide in-depth analysis for each type of risk, especially credit risk. However, using archival data, in addition to those from the survey, minimises the bias that would result from depending on one source of data.

Practical implications

The study provides valuable insights into the different types and levels of risk, as well as the RMPs in Islamic and conventional banks, which can help in guiding the future development and regulation of risk management in the banking sector of Qatar and its region.

Originality/value

The study helps to explain the mixed results of previous studies that compare types and levels of risk and RMPs in Islamic and conventional banks. Using different types of data and analysis, it provides evidence from one of the fastest growing economies in the world. It also addresses the concerns over RMPs in banks since the global financial crisis.

Details

Journal of Islamic Accounting and Business Research, vol. 11 no. 8
Type: Research Article
ISSN: 1759-0817

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Article
Publication date: 6 May 2020

Maryam Al-Qahtani and Adel Elgharbawy

The global interest in climate change makes carbon information important for decision-making. This study examines to what extent companies voluntarily disclose and manage…

2968

Abstract

Purpose

The global interest in climate change makes carbon information important for decision-making. This study examines to what extent companies voluntarily disclose and manage greenhouse gas (GHG) information and whether board diversity and industry type explain variations in the level of disclosure and management of GHG information.

Design/methodology/approach

Cross-sectional data analysis is used for the Financial Stock Exchange 350 (UK FTSE 350) in 2017. Disclosure of GHG information is measured using the scores of the Carbon Disclosure Project (CDP), whereas board diversity is measured using gender diversity, board tenure and board skills. The control variables include firm size, leverage, industry type, board meetings, board size, board independence and CEO duality. Ordinal logistic regression (OLR) is used for data analysis.

Findings

The results indicate that representation of female directors in the board of directors positively influences disclosure and management of GHG information. Conversely, a high percentage of directors with a financial and industrial background negatively affects GHG information, while board tenure has no significant effect on GHG information. Concerning the control variables, only firm size and industry type are significant in their relationships to GHG information.

Research limitations/implications

The main limitation of the study is investigating only few variables of board diversity. Future studies could investigate other variables such as cultural diversity and age diversity. Furthermore, cross-sectional data analysis cannot capture the dynamic casual impact between the determinants of disclosure and management of GHG information. Future studies could use long-term data, which may yield results that are more significant.

Originality/value

The study emphasizes the importance of the role of female directors in ensuring more transparency toward climate change activities. The findings of this study could be of interest to policymakers and stakeholders and could be used to take initiatives to reduce gender bias and increase the percentage of women in the boardroom. It is also likely to be beneficial for investors and stakeholders to evaluate carbon footprint of businesses and to assess the extent to which they meet their environmental responsibility.

Details

Journal of Enterprise Information Management, vol. 33 no. 6
Type: Research Article
ISSN: 1741-0398

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Article
Publication date: 24 December 2021

Khaled Hosny and Adel Elgharbawy

This study aims to investigate the relationship between board diversity and financial performance from a wide perspective, including multiple dimensions of board diversity.

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Abstract

Purpose

This study aims to investigate the relationship between board diversity and financial performance from a wide perspective, including multiple dimensions of board diversity.

Design/methodology/approach

The cross-sectional design of the FTSE 350 companies in the period of 2013–2019 was adopted in this study. Data were collected using the Thomson Reuters Eikon and BoardEx databases and analyzed via ordinary least Squares (OLS) regression.

Findings

Both gender and skill diversity positively affect financial performance. However, other dimensions of diversity, including board tenure, education and network, have no significant influence on financial performance. On the other hand, nationality diversity negatively affects financial performance, and the gender diversity of executive directors negatively affects market-based performance. The results remain unchanged after considering endogeneity concerns and using alternative measures of financial performance.

Practical implications

This study provides useful insights into the importance of board diversity and its implications for firm performance, which can help in the development of future regulations and policies, such as female representation on the board. The findings can also guide companies toward the best way of diversifying their boardrooms in different aspects.

Originality/value

This study extensively investigates board diversity, including gender, tenure, skill and education, network and nationality, using the lens of the resource dependency theory. It also extends the scope of the study to examine some characteristics of executive directors, including gender and age. The evidence is provided from one of the leading countries in regulating corporate governance (CG), i.e. the UK.

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Article
Publication date: 20 July 2022

Patrick Velte

This paper aims to analyze the impact that sustainable board governance has on corporate social responsibility (CSR) on the European capital market because of the current debate…

1714

Abstract

Purpose

This paper aims to analyze the impact that sustainable board governance has on corporate social responsibility (CSR) on the European capital market because of the current debate of future European regulations on the topic.

Design/methodology/approach

Based on a legitimacy and stakeholder theoretical framework, the author conducts a structured literature review and includes 86 quantitative peer-reviewed empirical (archival) studies on board gender diversity, sustainability board expertise and sustainability-related executive compensation and their impact on CSR variables.

Findings

Gender board diversity represents the most important variable in this literature review. The included categories of sustainable board governance positively influence both the total CSR and environmental outputs.

Research limitations/implications

A detailed analysis of sustainable board governance proxies is needed in future archival research to differentiate between symbolic and substantive use of CSR. In view of the current European reform initiatives on sustainable corporate governance in line with the EU Green Deal project, future research should also analyze the interactions between the included sustainable board governance variables and their contributions to CSR.

Practical implications

As both stakeholder demands’ on CSR outputs and CSR washing have increased since the financial crisis of 2008–2009, firms should be aware of a substantive integration of sustainability within their boards of directors (e.g. because of composition and compensation) to increase their CSR efforts and long-term firm reputation.

Originality/value

This analysis makes useful contributions to prior research by focusing on sustainable board governance as a key determinant of CSR outputs on the European capital market. The European Commission’s future evidence-based regulations [e.g. the corporate sustainability reporting directive (CSRD) and the corporate sustainability due diligence directive (CSDD)] should be promoted.

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Article
Publication date: 13 October 2022

Ahmad Yuosef Alodat, Zalailah Salleh and Hafiza Aishah Hashim

This paper aims to examine the impact of corporate governance (CG) on sustainability disclosure (SD) from the perspectives of resource dependence, agency and stakeholder theories…

1002

Abstract

Purpose

This paper aims to examine the impact of corporate governance (CG) on sustainability disclosure (SD) from the perspectives of resource dependence, agency and stakeholder theories in the context of Jordan.

Design/methodology/approach

The analyses were based on 405 observations from non-financial firms listed on the Amman Stock Exchange, spanning the period of 2014–2018. The CG that influences SD was examined using panel data regression models.

Findings

The results of the current study show a positive and significant relationship between the extent of SG and the audit committee and board of directors’ effectiveness. In terms of ownership structure, both institutional and foreign ownerships yielded an insignificant relationship with the extent of SDs.

Practical implications

The analyses have implications for practitioners, policymakers, top management and corporate executives. Firms are encouraged to restructure their board of directors to enhance the effectiveness of the board to better monitor and support better SD.

Originality/value

To the best of the authors’ knowledge, this is the first study to examine the determinants of SD in Jordan firms. This paper adopted a newly developed global reporting initiative-based reporting index that identifies companies with good sustainability practices. This adds value to the existing sustainability literature.

Details

Corporate Governance: The International Journal of Business in Society, vol. 23 no. 3
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 16 June 2023

Aditya Pandu Wicaksono, Hadri Kusuma, Fitra Roman Cahaya, Anis Al Rosjidi, Arief Rahman and Isti Rahayu

This study aims to investigate the effect of the classification of origin country of institutional shareholder (domestic, developed and developing country) and its status on stock…

799

Abstract

Purpose

This study aims to investigate the effect of the classification of origin country of institutional shareholder (domestic, developed and developing country) and its status on stock exchange (listed and unlisted) on environmental disclosure level in Indonesian companies.

Design/methodology/approach

The data set comprises 474 non-financial firms listed in Indonesian Stock Exchange (IDX) for the period of 2017 to 2019. The study uses an environmental disclosure checklist to measure the extent of environmental disclosure in companies’ reports. Panel regression analysis technique is adopted to investigate the association between total percentage of shares held by institutional shareholders based on the classification of origin country and the status in stock exchange, and the extent of environmental disclosure.

Findings

The study reveals that the extent of environmental disclosure is positively and significantly associated with institutional investors from domestic, developed countries, listed and unlisted institutional investors. Further analysis shows interesting results that institutions from developing countries have a negative and significant relationship with environmental disclosure in non-sensitive industries.

Research limitations/implications

The authors recognize the issue of authors’ subjectivity in the measurement process of environmental disclosure. The sample for this study encompasses Indonesian listed firms. Thus, the results may not be generalized to Indonesian unlisted firms and other countries or regions.

Practical implications

This study suggests managers to engage more with institutional shareholders because they have greater concern for environmental disclosure practices. The current study also suggests managers to make strong environmental policies as they are important to ensure that institutional shareholders’ investments are safe.

Social implications

Given the positive impact institutional shareholders have on the level of environmental disclosure, it indirectly indicates that institutional shareholders have a strong motivation to make the world a better place.

Originality/value

This study offers in-depth insights into the effect of institutional ownership on environmental disclosure based on the classification of origin country and listing status of institutional investors.

Details

Corporate Governance: The International Journal of Business in Society, vol. 24 no. 1
Type: Research Article
ISSN: 1472-0701

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